Pareto Principle or 80/20 Rule: How to Achieve More With Less

Pareto Principle or 80/20 Rule | Productive and Free
 

Here's a recipe for overwhelm:

Unlimited tasks and responsibilities given limited resources like time and energy

The problem here is that overwhelm can't be solved with a "do more and get more done" way of thinking, as traditional productivity strategies suggest. In fact, this could even backfire and just cause more overwhelm.  

The solution is to develop prioritization by shifting to a "less but better" mindset. Prioritization will not only help us overcome or avoid overwhelm, but it will also magnify our results since we'll be able to focus on the vital few instead of the trivial many.

Instead of merely getting things done, we need to get the right things done and in the right order.

Think of it as if you're holding a magnifying glass over a bunch of dry leaves on a sunny day. If you constantly move the magnifying glass around, nothing will happen except maybe you'll strain your wrist. But if you focus the magnifying glass on a specific spot, you can use the sun's rays to ignite a flame.

In more practical terms, consider implementing the Pareto Principle or 80/20 Rule as an effective way to prioritize and achieve more with less.

 

The Pareto Principle or 80/20 Rule

The Pareto Principle or 80/20 Rule comes from the Italian economist and sociologist, Vilfredo Pareto, who observed that 80% of effects stem from only 20% of causes.

First, he noticed that in his garden, only a small portion of his pea pods, roughly 20%, generated majority of the peas, about 80%. Next, he observed the same principle in macroeconomics, noticing that only 20% of the Italian population owned 80% of the country’s wealth.

Soon after, this 80/20 Rule was acknowledged by other industry experts in business to personal development as an insightful way to evaluate decisions, processes, and patterns. 

In terms of business, 20% of products tend to generate 80% of profits. In terms of customer service, 20% of customers tend to make 80% of complaints. In terms of sales, 20% of sales persons tend to drive 80% of sales. In terms of traffic accidents, 20% of motorists tend to cause 80% of accidents. Even the clothes that you wear 80% of the time tend to be taken from only 20% of your wardrobe.

 

Same Principle, Different Leaders

The Pareto Principle is so remarkable that variations of it have been acknowledged or implemented by several industry leaders and authors. Here are some of them:

· Warren Buffet

The billionaire business magnate has a 20-Slot Rule in which he urges investors to double down on the best and highest-generating investments. As he explained to Charlie Munger, “I could improve your ultimate financial welfare by giving you a ticket with only 20 slots in it so that you had 20 punches—representing all the investments that you got to make in a lifetime. And once you’d punched through the card, you couldn’t make any more investments at all.”

· Peter Drucker

The same way that the Pareto Principle highlights the vital 20%, Peter Drucker emphasizes eliminating the trivial 80%. In his seminal book The Effective Executive, the management guru introduced the term "posteriorities" (kind of the opposite of priorities) which points out the things you should say "no" to because they offer little to no significant results.

· Tim Ferriss

One of the things famed podcaster and author of The 4-Hour Workweek Tim Ferriss is known for is his enthusiasm for rapid learning. Applying the Pareto analysis, he's been able to learn new languages, how to shoot free throws more consistently, how to play the guitar, how to be more productive, etc. with less time and effort.

· Gary Keller and Jay Papasan

In the book The One Thing, authors Gary Keller and Jay Papasan suggests focusing on your lead domino which is the one task that would topple a sequence of dominos, and even knock down larger dominos in succession. They said, "You need to be doing fewer things for more effect instead of doing more things with side effects."

· Richard Koch

Author Richard Koch expounded on this concept in his book The 80/20 Principle. To follow in the steps of highly effective people and organizations, his advice was to leverage on the magic 20% in terms of what you do with your time and how you direct your efforts. 

 

The Good News

When it comes to prioritization and getting the right things done, the Pareto Principle comes with very good news: we only need to identify our top 20% activities or highest value tasks and focus on it. Doing so will help us avoid overwhelm, prevent procrastination, and stop using "busy" as a badge of honor.

Because the top 20% tasks generate the most impact or income anyway, it just doesn't make sense to allocate an equal amount of resources of time, energy, attention, or money to everything. No more trying to do too many, yet accomplishing too little. No more moving an inch in a hundred different directions. No more spreading yourself too thin.

In other words, you'll be able to achieve much more with much less effort.

 

Pareto Principle Applications

Here are some suggestions as to how you can implement the 80/20 Rule in your life and business.

1. Your to-do list 

If you have 10 tasks on your to-do list for today, chances are that only two of those would best move you towards your goals, yield majority of your results, and make the most impact. Consider prioritizing those top two tasks, at least before tackling the rest.

2. Your time

How much of your work day do you spend on actual work? Consider the possibility that 20% of your work day is sufficient to get the whole day's work done if you avoid distractions and interruptions. It might also be that 80% of your work day is being spent on the least impactful, fulfilling, or income-generating activities.   

3. Your habits

When it comes to your daily routines, a few of your habits actually benefit you significantly more. Also known as keystone habits, consider the good habits that allow you to hit two birds with one stone. One example is exercise, which not only promotes your physical well-being but also helps you develop a sharper mind, have more confidence, hone your time management skills, etc. 

4. Books

Reading books is another example of those keystone habits I mentioned but it doesn't have to be so tedious as many people perceive it to be. Implement the 80/20 Rule by asking yourself: What 20% of the book’s lessons can you learn and apply this week?

5. Phone apps and notifications

It might be that not all the apps in your phone are being used and not all notifications that are turned on are important. Instead of allowing these to interrupt you while you work, clutter your phone, or eat up your storage, consider deleting unnecessary apps and disabling unimportant notifications.

5. Products

If you're a business owner, it helps to determine which products drive majority of your profits. If you have several categories of products, which line of products is making significantly more than the rest? Which product is making majority of the profits from that line?

6. Services 

More than just thinking of profits, consider which of the services you offer are actually less time and energy -consuming but more helpful for clients and profitable for you. Would it make sense to create service packages instead of a la carte services? Which service has the biggest gap between impact and effort?

7. Clients or Customers 

Consider current clients or customers who could bring in more business for you themselves or by referral. Which customers make the most complaints but contribute the least to your bottomline? Which clients take up majority of your time?   

8. Website Traffic

If you own a website, it's no secret that high website traffic is critical to success. It helps, therefore, to determine where your traffic actually comes from—search engines, social media, podcast interviews, guest postings, referrals, etc.—so you could buckle down on those top sources and/or optimize the pages that visitors land on.   

10. Marketing or Social Media

Which marketing strategies are more effective than the rest? Which marketing efforts are costing you the most money and manpower? Which social media platform drives majority of your traffic or engagement? On the other hand, which social media platform drives majority of your profits (because followers don't always equal to more sales)?

11. Blog posts

Assuming you blog for your business consistently, what kind of blog posts get the most engagement (shares, comments, opt-ins)? Which blog posts are generating the most traffic but are not yet optimized to capture leads? Are you blogging about different unrelated topics or are you focused on attracting a smaller niche? 

12. Sources of Income

If you have more than one revenue stream, which source is driving the most income for you? Which requires the least effort? Which has increased significantly more than others in the recent months or years? Which has the potential to increase the most over the next months or years?

 


Want more PRIORITIZATION strategies?


 

5 things to remember

When implementing the Pareto Principle, here are five other things to remember.

1. Don't be bogged down by the specific 80/20 ratio.

Whether it’s 80/20, 90/10, or 70/30, the key takeaway here is that majority of the effects come from the minority of the causes.

2. Having very clear goals is essential for the 80/20 Rule to work effectively.

Since we're talking about causes and effects, effort and results, or inputs and outputs, first determine what the success of those outcomes look like so you could easily differentiate where the cutoff of the 80/20 actually is. 

3. Your 20% might change over time.

Since your 20% might change over time, don’t be discouraged when "focusing on your 20%" isn't consistently generating the results you intended. For example, if you're a blogger and 80% of your traffic today comes from Pinterest, this might change in the next months if, let's say, Pinterest changes their algorithm to your disadvantage or if you publish several SEO-optimized blog posts and they all rank high in Google.

4. Others' 20% won't automatically apply to you.

Beware of adopting another business's or someone else's 20%. Again using the example of blogging, one blogger might tout that majority of her traffic comes from XYZ but it all depends on a variety of factors like her niche, marketing strategies, online presence, social proof, etc. 

5. Once you validate your 20%, double down. 

The beauty of the 80/20 Rule is that you could take it one step further. From the top 20%, narrow it down to the top 4%. Then from the top 4%, focus on only the highest 1%. This is especially helpful for extremely busy people like CEOs, professionals, coaches, or freelancers.

Going all in and doubling down on not only your important tasks, but your most important tasks, will guarantee better and faster results. 

 

Conclusion

Remember, the whole purpose of prioritization is to identify your most important or highest value activities. It's the solution to having unlimited tasks but only limited resources like time, energy, attention, and money.

One effective way to prioritize is by implementing the Pareto Principle or 80/20 Rule which highlights the inequality among your tasks or activities. The good news here is that if you focus on the vital few instead of the trivial many, you can actually achieve much more with much less effort.

 

Share in the comments below: How do you implement the Pareto Principle in your daily life or business? How often do you get the right things done, in the right order?